UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X.
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2009
.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______to________
Commission file number 000-52984
ENSIGN SERVICES, INC.
(Exact name of registrant as specified in its charter)
Nevada |
| 26-1545353 |
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
Patricia G. Skarpa Ensign Services, Inc. 914 Park Knoll Lane Katy, TX 77450 (Address of principal executive offices) |
281-398-1433 |
(Issuer's telephone number) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X. No .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer . Accelerated Filer . Non-Accelerated Filer . Smaller Reporting Company X.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act) Yes . No X.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes . No X.
At May 18, 2009 the number of shares of the Registrant’s common stock outstanding was 10,000,600.
ENSIGN SERVICES, INC.
INDEX
PART I | ||
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ITEM 1 | FINANCIAL STATEMENTS | 4 |
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ITEM 2 | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 9 |
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ITEM 3 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 12 |
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ITEM 4 | CONTROLS AND PROCEDURES | 12 |
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PART II | ||
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ITEM I | LEGAL PROCEEDINGS | 13 |
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ITEM 2 | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 13 |
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ITEM 3 | DEFAULTS UPON SENIOR SECURITIES | 13 |
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ITEM 4 | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 13 |
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ITEM 5 | OTHER INFORMATION | 13 |
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ITEM 6 | EXHIBITS | 13 |
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PART I
This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management's beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning possible or assumed future results of operations of the Company set forth under the heading “Management's Discussion and Analysis of Financial Condition or Plan of Operation.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.
Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. The Company's future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.
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ITEM 1
FINANCIAL STATEMENTS
ENSIGN SERVICES, INC
Balance Sheets
See accompanying notes to the financial statements.
4
ENSIGN SERVICES, INC.
Statements of Operations
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| Three Months Ended March 31, 2009 (Unaudited) |
| Three Months Ended March 31, 2008 (Unaudited) |
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Revenue | $ | 26,500 | $ | 18,500 |
Expenses |
| 27,500 |
| (20,000) |
Net Loss | $ | (1,000) | $ | (1,500) |
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Net loss per share - basic and diluted | $ | (0.00) | $ | (0.00) |
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Weighted average number of common shares outstanding - basic and diluted |
| 10,000,000 |
| 10,000,000 |
See accompanying notes to the financial statements.
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ENSIGN SERVICES, INC.
Statements of Operations
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| Six Months Ended March 31, 2009 (Unaudited) |
| Six Months Ended March 31, 2008 (Unaudited) |
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Revenue | $ | 49,350 | $ | 20,750 |
Expenses |
| 51,350 |
| (23,750) |
Net Loss | $ | (2,000) | $ | (3,000) |
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Net loss per share - basic and diluted | $ | (0.00) | $ | (0.00) |
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Weighted average number of common shares outstanding - basic and diluted |
| 10,000,000 |
| 10,000,000 |
See accompanying notes to the financial statements.
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ENSIGN SERVICES, INC.
Statements of Cash Flows
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| Six Months Ended March 31, 2009 (Unaudited) |
| Six Months Ended March 31, 2008 (Unaudited) |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss | $ | (2,000) | $ | (3,000) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Increase in accrued expenses |
| 2,000 |
| 3,000 |
Net cash used in operating activities |
| - |
| - |
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NET CHANGE IN CASH |
| - |
| - |
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CASH AT BEGINNING OF PERIOD |
| - |
| - |
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CASH AT END OF PERIOD | $ | - | $ | - |
See accompanying notes to the financial statements
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ENSIGN SERVICES, INC.
March 31, 2009 and 2008
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
NOTE 1
BASIS OF PRESENTATION
The accompanying unaudited financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been included. These financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended September 30, 2008 and notes thereto contained in Form 10K as filed with th e SEC on January 27, 2009. Interim results are not necessarily indicative of the results for the full fiscal year.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.
NOTE 2
GOING CONCERN
The Company was in the development stage until late December 2007 at which time it started generating revenue when it began performing its initial engagements providing administrative and office services. Since then all of its engagements have been with parties that are related to each other but unrelated to the Company. It cannot predict the amount of additional revenue that will be generated from these engagements or the timing or likelihood of obtaining additional engagements. Its activities prior to December 2007 were organizational and developmental in nature.
As reflected in the accompanying financial statements, the Company had an accumulated deficit of $50,000 at March 31, 2009.
Management believes that the actions presently being taken to further implement its business plan and generate additional revenues provide it with the opportunity to continue as a going concern. There are no assurances that the Company will complete the engagements successfully or that these engagements will be extended. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
On March 19, 2009, Ensign Services, Inc. (the “Company”) entered into a Share Exchange Agreement (the “Agreement”) among the Company and certain of its shareholders, Timex Petrol (“Timex”), a joint stock Vietnamese company and the shareholders of Timex (the “Timex Shareholders”). Pursuant to the terms of the Agreement, the Company agreed to issue to the Timex Shareholders an aggregate of 45,900,000 shares of its common stock in exchange for all of the issued and outstanding shares of Timex. The closing of the Agreement is subject to the fulfillment of certain conditions, including, but not limited to the receipt of all requisite consents, waivers and approvals by the Company and Timex.
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Certain matters discussed in this interim report on Form 10-Q are forward-looking statements. Such forward-looking statements contained in this annual report involve risks and uncertainties, including statements as to:
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our future operating results,
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our business prospects,
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our contractual arrangements and relationships with third parties,
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the dependence of our future success on the general economy and its impact on the industries in which we may be involved,
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the adequacy of our cash resources and working capital, and
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other factors identified in our filings with the SEC, press releases and other public communications.
These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe," “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated as of the date of this Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this report and we und ertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
The following discussion and analysis provides information which management believes to be relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read together with the Company's financial statements and the notes to financial statements, which are included in this report.
This management's discussion and analysis or plan of operation should be read in conjunction with the financial statements and notes thereto of the Company for the quarter ended March 31, 2009. Because of the nature of a relatively new and growing company the reported results will not necessarily reflect the future.
Operations
We were incorporated on July 13, 2005 by Dr. Richard Barton. Our initial purpose was to market an electronic medical records software application called “Health-Chart” that had been under development for the preceding ten years. We were unsuccessful in obtaining the necessary financing to undertake further development of the product and initiate marketing efforts and discontinued our efforts in the initial plan in 2006. In March 2007, Patricia G. Skarpa joined us and we initiated a new business plan to provide administrative and office services in the Houston, Texas area. Revenue generation commenced in late December 2007. All arrangements are oral and not covered by written agreements. We cannot predict the likelihood of obtaining additional engagements.
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Our initial engagements have been performed by Ms. Skarpa and will require substantially all of her time through at least the end of March 2009. These engagements involve and will likely involve the performance of secretarial and administrative work for clients that have a need for such services to meet increased work demands during that period. To date, all engagements have been performed for clients that are related to each other but unrelated to us. There is no commitment that any new engagement will be obtained or the current engagement extended.
Our overall business plan for the next nine to 12 months is for Ms. Skarpa to seek engagements using her business contacts. She will perform the work required on many, if not most, of these engagements. She will engage independent firms and contractors to assist her to perform the portion of the work that she does not perform. Thereafter, she will seek to locate independent contractors to perform an increasing portion of the engagements obtained. In those cases where independent contractors are used, our goal will be to realize at least a 15% to 20% gross margin.
We will seek to collect our fees on a weekly or monthly basis depending on competitive factors relating to each engagement.
We cannot predict what our level of activity will be over the next 12 months because we do not know how many client engagements we will obtain.We will not incur any cash obligations that we cannot satisfy with known resources of which there are currently none except as described in this report. Our president will provide her services at no cost for several months, if necessary.
All expenses consisted of direct costs of performing the engagements and professional fees.
Liquidity
Ensign does not have any credit facilities or other commitments for debt or equity financing. No assurances can be given that advances when needed will be available. We do not believe that we need funding to cover current operations because we do not have a capital intensive business plan and can also use independent contractors to assist in many projects. We will use funding, if obtained, to cover the salary of our president and to pay for marketing materials and proposal efforts. We currently have no formal salary arrangements with Ms. Skarpa. While no annual salary or length of employment has been determined to date, we anticipate providing an annual salary not to exceed $100,000 commencing after the successful completion of several engagements which in the aggregate exceeds $200,000 in revenue. The salary will be paid out of revenues, if any, or accrued if sufficient cash is not available to make payments.The accrual will begin after we have g enerated revenue of at least $200,000.
We are subject to the reporting requirements of the Exchange Act of 1934 and will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements. We estimate that these costs may range up to $50,000 per year for the next few years and will be higher if our business volume and activity increases but lower during the first year of being public because our overall business volume will be lower, and we will not yet be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. These obligations will reduce our ability and resources to fund other aspects of our business. We hope to be able to use our status as a public company to increase our ability to use noncash means of settling obligations and compensating independent contractors who provide services for us, although there can be no assurances that we will be successful in any of those efforts. We w ill reduce the compensation levels paid to management if there is insufficient cash generated from operations to satisfy these costs.
To meet commitments that become due more than 12 months in the future, we will have to obtain client engagements in sufficient number and at sufficient levels of profitability. There does not currently appear to be any other viable source of long-term financing except that management may consider various sources of debt and/or equity financing if the same financing can be obtained on terms deemed reasonable to management.
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Recent Accounting Pronouncements
In June 2003, the Securities and Exchange Commission (“SEC”) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), as amended by SEC Release No. 33-8934 on June 26, 2008. Commencing with the Company’s Annual Report for the fiscal year ended March 31, 2010, the Company is required to include a report of management on the Company’s internal control over financial reporting. The internal control report must include a statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting for the Company; of management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of year end; of the framework used by management to evaluate the effectiveness of the Company’s internal control over financial reporting; and that the Company’s independent accounting firm has issued an attes tation report on management’s assessment of the Company’s internal control over financial reporting, which report is also required to be filed as part of the Annual Report on Form 10-K.
In May 2008, the FASB issued Statement of Financial Accounting Standard No. 162 “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). The purpose of this standard is to provide a consistent framework for determining what accounting principles should be used when preparing U.S. GAAP financial statements. SFAS 162 categorizes accounting pronouncements in a descending order of authority. In the instance of potentially conflicting accounting principles, the standard in the highest category must be used. This statement will be effective 60 days after the SEC approves the Public Company Accounting and Oversight Board’s related amendments. The Company believes that SFAS 162 will have no impact on their existing accounting methods.
In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) Financial Accounting Standard (FAS) 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”. Based on the guidance, if an entity determines that the level of activity for an asset or liability has significantly decreased and that a transaction is not orderly, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transaction or quoted prices may be necessary to estimate fair value in accordance with Statement of Financial Accounting Standards (SFAS) No. 157 “Fair Value Measurements”. This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 200 9. The company will adopt this FSP for its quarter ending June 30, 2009. There is no expected impact on the financial statements.
In April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board (APB) 28-1 “Interim Disclosures about Fair Value of Financial Instruments”. The FSP amends SFAS No. 107 “Disclosures about Fair Value of Financial Instruments” to require an entity to provide disclosures about fair value of financial instruments in interim financial information. This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. The company will include the required disclosures in its quarter ending June 30, 2009.
In April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets”. The FSP states that in developing assumptions about renewal or extension options used to determine the useful life of an intangible asset, an entity needs to consider its own historical experience adjusted for entity-specific factors. In the absence of that experience, an entity shall consider the assumptions that market participants would use about renewal or extension options. This FSP is to be applied to intangible assets acquired after January 1, 2009. The adoption of this FSP did not have an impact on the financial statements.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.
Critical Accounting Policies
The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
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An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.
Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made.
Seasonality
We do not yet have a basis to determine whether our business will be seasonal.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, obligations under any guarantee contracts or contingent obligations. We also have no other commitments, other than the costs of being a public company that will increase our operating costs or cash requirements in the future.
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Since we have no assets, there is no quantitative information, as of March 31, 2009, about market risk that has any impact on our present business. Once we begin making investments in eligible portfolio companies there will be market risk sensitive instruments and we will disclose the applicable market risk information at that time.
ITEM 4
CONTROLS AND PROCEDURES
(a)
Evaluation of Disclosure Controls and Procedures.
An evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") (in this case the same person), of the effectiveness of the Company's disclosure controls and procedures as of March 31, 2009. Based on that evaluation, the CEO/CFO has concluded that the Company's disclosure controls and procedures are effective to provide reasonable assurance that: (i) information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company's management, including the CEO/CFO, as appropriate to allow timely decisions regarding required disclosure by the Company; and (ii) information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summar ized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
(b)
Changes in Internal Controls.
During the quarter ended March 31, 2009, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
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PART II
Item 1
Legal Proceedings
None
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3
Defaults upon Senior Securities
None
Item 4
Submission of Matters to a Vote of Securityholders
None
Item 5
Other Information
None
Item 6
Exhibits
None
Exhibit Number | Description |
31.1 | Section 302 Certification of Chief Executive Officer and Chief Financial Officer |
32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 |
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ENSIGN SERVICES, INC.
(Registrant)
By:/s/Patricia G. Skarpa
Patricia G. Skarpa
President
May 18, 2009
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